Laguna Rep. Danny Fernandez raised concerns over foreign ownership in the National Grid Corporation of the Philippines (NGCP), particularly in light of a share-swap agreement that appears to circumvent the required public offering of 20 percent of the utility within 10 years of securing its legislative franchise.
During a hearing of the Committee on Legislative Franchise on Monday, Fernandez claimed that NGCP might be in violation of the 40 percent foreign ownership cap for utilities.
Before the share-swap deal, which involved listed companies Synergy Grid & Development, OneTaipan Holdings Inc., and Pacifica2 Holdings, foreign ownership in NGCP had already reached the maximum 40 percent threshold due to the stake held by State Grid Corporation of China.
In December 2019, Synergy secured control of NGCP from after securing 67 percent each in privately-held OneTaipan and Pacifica2. OneTaipan controls Monte Oro Grid Resources Corp., which owns 30 percent of NGCP, while Pacifica2 holds Calaca High Power Corp., which also owns 30 percent of NGCP. Consequently, Synergy retains a 40.02 percent stake in NGCP but exercises control over 60 percent of the voting rights.
Fernandez noted that records filed by Synergy with the Philippine Stock Exchange, approximately 7 percent of the listed company is owned by foreign investors. This raises concerns about whether the company is complying with Philippine laws governing foreign ownership limits for public utilities.
Fernandez also questioned NGCP’s financial practices, criticizing the utility for paying substantial dividends to shareholders while infrastructure projects were delayed. He highlighted that in 2014, NGCP paid out P24 billion in dividends—exceeding its net income of P22 billion for the year—while simultaneously reporting delays in key projects.
Energy Undersecretary Sharon Garin pointed out that over the past 16 years, NGCP has paid out a total of P236 billion in dividends, compared to only P203 billion in concession fees paid to the government.
Garin further explained that NGCP’s net income over the past 14 years amounted to P315 billion, with approximately 75 percent of this being returned to shareholders. She also noted that, according to NGCP’s audited financial statements, the total value of transmission assets is P544 billion, which is well below the P663 billion in total revenue generated over the same period. Additionally, total capital expenditures during these 14 years amounted to P237.8 billion, while total loans stood at P237.6 billion.
As the House investigation into NGCP continues, the company is facing increasing scrutiny over its operations, governance, and impact on the power sector. Lawmakers and energy officials are calling for greater accountability to ensure that NGCP meets its obligations to the public and that consumers are not unfairly burdened by the costs of incomplete or delayed projects.
